Meeting the dealer requirements in Texas is fairly strenuous and is
not a task to be taken on lightly.
If you plan on selling more than 5 vehicles a year, you'll need a
state-issued "General Dealer Distinguishing Number" (or, in plain
english, a dealer license). The cost is $500 per location for used or
independant new car dealerships. If you plan on opening a franchise
dealership, there will be an additional $175 franchise fee. In
addition, there is a $200 per year renewal fee for independant
dealers. If you are a franchise dealer, the renewal fee is based on
the number of vehicles sold.
They won't give this distinguishing number to just anyone, though.
According to section 503.029 of the Texas Transportation code, you
need to do all of the following:
- Submit a written application on a form provided by the Motor
Vehicles Dept.
- Specify what type of motor vehicle you wish to deal (cars,
motorcyles, etc)
- Specify whether you are to be an independant or franchise dealer
So much for the easy stuff! In addition, you must:
- Be able to prove that the location you plan to deal from is an
"established" place of business". This means (according to section
503.032) that the location must have a conspicuous sign, a furnished
office, and sufficient space to display at least 5 vehicles of the
type you plan to sell. In addition, you must either own the property
or have a lease for at least one year.
- Offer evidence that you plan to pursue the business for at least
one year
- Offer evidence that you or an employee will be available to the
public during reasonable business hours.
- Have a surety bond in the amount of $25,000, or a pledge of
cash/certificate of deposit for that amount.
In addition to these requirements, you also need to be prepared to
keep records of all vehicles you deal with, including the VIN, name of
purchaser, purchasee, and dates of purchase for at least 2 years. This
applies in addition to all federal and state-mandated requirements for
business record-keeping. Car dealerships are, of course, subject to
all federal and state requirements for operating a business.
Dealer plates cost $20 (with a few exceptions), and must be kept under
lock and key when not in use. As the dealer, you are responsible for
any misuse of dealer plates.
Your "general distinguishing number" may be revoked by the state for a
number of reasons, including but not limited to:
- Failure to deal more than 5 vehicles in a year
- Failure to follow tax code specified in sections 23.12, 23.121, and
23.122
- Failure to keep proper records of purchase and sale
- Failure to properly track temporary license plates or dealer plates
- Failure to meet any of the application requirements at the time of
renewal
Operating as a dealer (as defined in section 503.001) without having a
general distinguishing number is a misdemeanor. Doing so willfully, or
falsifying data in order to obtain a number can be treated as a felony
offense.
Most of this information came straight from the relevant statutes.
Please note that I am NOT a lawyer; this (and any) advice obtained
through Google Answers should not be construed as legal advice. I hope
you find this information useful, but if you want to be 100% certain
you should consult a lawyer.
There's a lot of money in owning a dealership for someone who is
determined to make it succeed. Best of luck to you!
Some helpful links:
Relevant statutes of Texas Transportation code (chapter 503):
http://www.capitol.state.tx.us/statutes/tr/tr0050300.html
Required record-keeping procedure for motor vehicle dealers (PDF):
ftp://ftp.dot.state.tx.us/pub/txdot-info/mvd/records.pdf
Dealer plates and temp tags (PDF):
ftp://ftp.dot.state.tx.us/pub/txdot-info/mvd/tagsplates.pdf
Tax information for car dealers (specifically 23.121):
http://www.capitol.state.tx.us/statutes/ta/ta0002300toc.html
Tax exemption form for a vehicle purchased for resale (PDF):
http://www.window.state.tx.us/taxinfo/taxforms/14-313.pdf
Brief summary of dealer requirements, by state:
http://cardollars.com/statdeallicr.html
Phone numbers for Dept. of Transportation offices around the state:
http://www.dot.state.tx.us/contact/phone.htm
Texas Dept. of Transportation:
http://www.dot.state.tx.us/txdot.htm |
